We Ran A Stock Scan For Earnings Growth And Focus Lighting and Fixtures (NSE:FOCUS) Passed With Ease

Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Focus Lighting and Fixtures (NSE:FOCUS). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

View our latest analysis for Focus Lighting and Fixtures

How Fast Is Focus Lighting and Fixtures Growing Its Earnings Per Share?

Over the last three years, Focus Lighting and Fixtures has grown earnings per share (EPS) at as impressive rate from a relatively low point, resulting in a three year percentage growth rate that isn't particularly indicative of expected future performance. Thus, it makes sense to focus on more recent growth rates, instead. Focus Lighting and Fixtures' EPS skyrocketed from ₹4.54 to ₹5.91, in just one year; a result that's bound to bring a smile to shareholders. That's a commendable gain of 30%.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. EBIT margins for Focus Lighting and Fixtures remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 18% to ₹2.3b. That's encouraging news for the company!

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

Focus Lighting and Fixtures isn't a huge company, given its market capitalisation of ₹7.9b. That makes it extra important to check on its balance sheet strength.

Are Focus Lighting and Fixtures Insiders Aligned With All Shareholders?

Seeing insiders owning a large portion of the shares on issue is often a good sign. Their incentives will be aligned with the investors and there's less of a probability in a sudden sell-off that would impact the share price. So we're pleased to report that Focus Lighting and Fixtures insiders own a meaningful share of the business. To be exact, company insiders hold 72% of the company, so their decisions have a significant impact on their investments. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. To give you an idea, the value of insiders' holdings in the business are valued at ₹5.7b at the current share price. That's nothing to sneeze at!

Does Focus Lighting and Fixtures Deserve A Spot On Your Watchlist?

You can't deny that Focus Lighting and Fixtures has grown its earnings per share at a very impressive rate. That's attractive. This EPS growth rate is something the company should be proud of, and so it's no surprise that insiders are holding on to a considerable chunk of shares. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow. Still, you should learn about the 2 warning signs we've spotted with Focus Lighting and Fixtures.

Although Focus Lighting and Fixtures certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of Indian companies that not only boast of strong growth but have strong insider backing.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.